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Apothecurry welcomes back guest columnist Dr Kristina Lybecker. Her latest column is an elegantly simple “where the rubber hits the road” exposition of the recent rejection of patents on US biopharma company Gilead’s Hepatitis C drug Sovaldi in India. Coincidentally, Gilead’s European patent on Sovaldi was challenged yesterday by charity Medicins du Monde marking yet another interesting turn of events in this breakthrough drug’s eventful life. Read on as Dr Lybecker explains how the Indian Patent Office’s decision rather than aiding clarity in the understanding of India’s patent rules has only muddied the waters.

In mid-January, the Indian Patent Office rejected US biopharmaceutical company Gilead’s application to patent Hepatitis C drug, Sovaldi (6087/DELNP/2005). The decision by Hardev Karar (Dy Controller General, Patent Office, Delhi) acknowledges that the compounds are novel and inventive, but rejects the patent application on the grounds that it fails to comply with Section 3(d). Specifically, the decision against Sovaldi notes that the innovator, Gilead, fails to establish enhanced therapeutic efficacy over previously known compounds. Gilead appealed to the Delhi High Court and the Court set aside the order and asked the Patent Office to review the case.

In the meantime, the Indian Patent Office’s decision has renewed the debate over what constitutes real innovation.

Harking back

This decision is clearly made in the shadow of the 2013 Supreme Court decision to reject Novartis’ cancer drug Glivec. In that judgement, the court established that the efficacy requirement in Section 3(d) is to be interpreted as proving the enhanced therapeutic efficacy of a substance. Given that Section 3(d) does not specify how ‘enhanced efficacy’ is to be interpreted nor provide any guidelines, the court’s decision was a welcome clarification.

It did, however, confirm that India requires a higher level of inventiveness to establish the patentability of new forms of known substances. Beyond the requirements outlined in the TRIPS Agreement of novelty, inventive steps, non-obviousness and industrial application, India requires the additional test of improved efficacy. With the April 2013 decision, the Indian Supreme Court established that improved efficacy means improved therapeutic efficacy.

One would have hoped that the most recent decision by the Indian Patent Office would further clarify therapeutic efficacy. Unfortunately, the decision only seems to have muddied the waters. In the decision the Controller writes, “The applicants showed the cytotoxicity data to prove the difference in properties which is insufficient to prove significant increase in the therapeutic efficacy. The data does not show any clinical trials to prove the improvement in the therapeutic efficacy.” It is worrisome that the examiner appears to now require clinical trials in order to demonstrate enhanced therapeutic efficacy.

Why this is problematic

Demonstrating improved therapeutic efficacy through clinical trials is an expensive and time-consuming process. Moreover, given the length of time required and the ongoing monitoring of trial subjects, the results of clinical trials are rarely available at the time a patent application is filed.

In the case of Gilead’s patent application, these circumstances are further complicated, perhaps making the requirement impossible to fulfill, because the ‘closest prior art’ is a compound covered by patent WO2001/92282 and referred to as “D1” by the Patent Office. While the Indian Patent Office required that Gilead demonstrate that its compound is therapeutically superior to the “D1” compound, the “D1” compound was never produced or marketed. Accordingly, Gilead could not include clinical trials data since such trials were impossible.

The Controller’s decision also raises questions as to whether lower toxicity may be interpreted as meeting the enhanced therapeutic efficacy requirement. Given the benefits to patients, it would seem that lower toxicity, as well as other characteristics such as improved absorption or reduced side-effects, should be considered enhanced therapeutic efficacy. The possibility that lower toxicity may not satisfy Section 3(d) is problematic both for patients and for innovators.

Uncertainty continues

For innovators, it is essential to know precisely how the threshold for enhanced therapeutic efficacy is established and what characteristics do and do not meet this standard. The ambiguity surrounding whether lower toxicity satisfies this requirement increases the risk and uncertainty of innovation and will reduce the incentives for investing in future innovation. For patients, this translates into fewer treatments and cures, and a reduced chance at enhancing and extending life with their use. Uncertainty takes a high toll on innovation and the benefits that flow from it.

The Patent Office decision to deny a patent to Gilead for Sovaldi seems to further narrow the scope of what innovation is patentable in India. Moreover, it provides evidence to substantiate the perception that India is hostile to innovation. Sovaldi is another casualty of India’s inadequate intellectual property protection. A December 2014 report by the U.S. International Trade Commission reports that 28% of pharmaceutical firms believe that India fails to sufficiently protect patents. The long-run consequences of such decisions paint a bleak picture for investment and innovation.

While India’s generic drug industry is certain to benefit in the short-run, innovative pharmaceutical firms will suffer and this will translate into less investment and less innovation. It is already happening. Following the Glivec decision, Ranjit Shahani, vice chairman and managing director of Novartis India noted that India’s discouraging IP environment has moved investment to China. Since the promulgation of the Indian patent law, seven companies (Novartis, Roche, Sanofi, Pfizer, GSK, Astra Zeneca and Elli Lilly) have invested billions of dollars in China without any investment in India.

Rather than resolving the uncertainty that surrounds the “enhanced therapeutic efficacy” requirement, the Sovaldi decision has created additional questions and casts doubt on India’s commitment to protecting intellectual property rights. The consequences extend far beyond affordable Hepatitis C drugs, dimming the promise of future innovations and reducing the incentives to invest in the science that will bring us valuable breakthrough therapies.

Dr Kristina Lybecker is Associate Professor of Economics at Colorado College in Colorado Springs where she is also the Associate Chair of the Department of Economics and Business. Dr Lybecker is an economist with a PhD from the University of California at Berkeley. She specialises in innovation and intellectual property rights and has been writing on these issues for over 12 years. She has also worked with the US Food and Drug Administration, PhRMA, and the World Bank, on a variety of issues relating to the economics of innovation and international trade policies.